The long-term goal of this study is to understand the biological function of ubiquitin like protein ISG15 in cancer development. In recent years our knowledge of protein ubiquitylation has expanded rapidly and as a consequence protein ubiquitylation is known to play important roles in various aspects of cellular function, including the cell cycle, membrane receptor signal transduction, endocytosis, protein quality control, transcription, and DNA repair. In contrast, too little is known about the role of ISG15, although we are starting to realize its importance. ISG15 is encoded by an interferon stimulated gene. Its expression is highly upregulated by Type I interferon and by any stress stimulations that promote interferon production. Since ISG15 is not found in simple eukaryotic organisms, such as yeast and nematodes, it is unlikely to be a housekeeping gene. Instead, it should be involved in specialized functions in complex organisms, such as human and mouse. We have identified a group of ISG15 targets, characterized the effect of ISG15 modification on some of these targets, identified the ISG15 E2, a few of the E3 enzymes and its deconjugating enzyme Usp18, and established ISG15 E1 Ube1L and Usp18 knockout mice. Recently, it has been reported that ISG15 expression is greatly enhanced during cancer development. We also observed a clear effect of the ISG15 system in cancer development in our mouse models. Therefore, this proposal will test the hypothesis that both free ISG15 and protein ISG15 modification (ISGylation) modulate cancer development. To test this hypothesis, we will perform the following studies: in Specific Aim #1, we will examine the role of protein ISGylation in regulating cancer development via studying the effect of ISGylation on factors that are critical for the specific phenotypes of cancer. The studies proposed in Specific Aim #2 will analyze the function of free ISG15 in the regulation of tumor malignancy. We have identified the interaction of ISG15 with important regulators of related processes. The proposed studies are based on our accumulated knowledge and our most recent novel findings of breast cancer in Ube1L knockout mice. This proposal will address important questions about molecular mechanisms of ISG15 and may provide novel insights into the prevention and therapeutic treatment of human cancer.